Recognising the role of the Higher Education Innovation Fund

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Universities play a key role in generating, collaborating with, and fostering innovative businesses.

They also play a key role in engaging with the public and third sector, and local communities. New data shows continued strength in university collaborations, with income from knowledge exchange growing to £4.2 billion across the UK in 2015-16. Knowledge exchange in this context covers a very broad range of activities, from commercialisation of new knowledge, delivery of professional training, to activities with direct social benefits. Underpinning the headline statistics are concrete examples where universities are working to support innovative businesses. For example:

The University of Reading has established the Thames Valley Science Park, building on the established cluster of high-growth potential companies already there. The new site will eventually deliver approximately 800,000 square feet of flexible laboratory and office space in a campus style setting designed to encourage collaboration, and has the potential to provide up to 5,000 new jobs.

Norwich University of the Arts' Ideas Factory incubation centre supports local digital creative SMEs to start up and grow. It gives them space, business support services and access to the university's infrastructure.

Manchester Metropolitan University has partnered with the Greater Manchester (GM) Business Growth Hub to deliver the GM High Growth network, a programme offering local SMEs peer to peer support for accelerating their growth.

The University of Hull has created around 150 new businesses at its Enterprise Centre. After five years, almost 90 of them were still in business, growing and employing graduate-level staff. The 'For Entrepreneurs Only' (FEO) organisation is based at the Enterprise Centre, and member companies have created 1,600 new jobs in the last 12 months.

Yet there is more work to do. Andrew Buckley, Chief Executive at RTC North, set out in a recent blog some of the challenges that SMEs face in engaging with their local universities. An opportunity exists for universities to go further in supporting and incubating local businesses, particularly SMEs. This was a theme that was emphasised in Universities UK's series of local events to shape our forthcoming response to the government's green paper on the industrial strategy. The events brought together businesses, universities and local stakeholders (including local enterprise partnerships, chambers of commerce and combined authorities). Stronger university-business collaboration can help drive local growth, and lead to broader economic growth which benefits the entirety of the UK.

The Higher Education Innovation Fund (HEIF) in England and the equivalent Universities Innovation Fund in Scotland have been very successful in supporting university-business collaborations. HEIF has a proven track record of success, with every £1 of spend delivering an estimated £9.70 in benefits for the economy and society. Research also shows that HEIF helps universities work constructively with SMEs and to develop local regional clusters of businesses. Universities UK strongly supports increasing HEIF to £250 million per year – and we will be emphasising this in our response to the government's green paper on the industrial strategy. This increase in funding should be a focus of the additional £4.7 billion of R&D funding that was announced in the Autumn Statement in 2016, as first steps towards the government's modern industrial strategy.

Historically, local economic development has benefitted from European Structural and Investment Funds (ESIF). The question arises as to how local initiatives could be funded domestically in the future, with the UK exiting the European Union. One such channel might be through increased investment in HEIF and devolved equivalents. Further increases beyond £250 million might be considered, if HEIF is to play a broader role in funding local initiatives in the future, and funded from outside of the additional £4.7 billion of R&D funding.

The latest survey data shows that universities have a robust platform on which to build further, and deeper, engagements with businesses of all sizes and across all parts of the UK. Increased investment in HEIF is a straightforward, effective and proactive means of growing and nurturing additional engagement, to spur productivity and economic growth across the UK. Recognition of the role of HEIF will be key to the success of the government's modern industrial strategy, and the UK's future economic prosperity.